Texas munity Bancshares(TCBS) - 2025 Q3 - Quarterly Report

Financial Position - Total assets decreased by $4.0 million, or 0.9%, to $439.5 million at September 30, 2025, from $443.5 million at December 31, 2024[127] - Cash and cash equivalents decreased by $1.1 million, or 8.3%, to $12.2 million at September 30, 2025, from $13.3 million at December 31, 2024[128] - Interest bearing deposits in banks decreased by $8.4 million, or 86.6%, to $1.3 million at September 30, 2025, compared to $9.7 million at December 31, 2024[129] - Securities available for sale increased by $10.7 million, or 14.2%, to $85.9 million at September 30, 2025, from $75.2 million at December 31, 2024[130] - Net loans and leases receivable decreased by $8.8 million, or 3.0%, to $284.9 million at September 30, 2025, from $293.7 million at December 31, 2024[132] - Total deposits decreased by $1.6 million, or 0.5%, to $334.2 million at September 30, 2025, from $335.8 million at December 31, 2024, with core deposits down by $11.7 million, or 5.7%[138] - Total shareholders' equity increased by $1.4 million, or 2.7%, to $53.5 million at September 30, 2025, primarily due to net income of $2.0 million for the nine months ended September 30, 2025[140] Income and Expenses - Net income for the three months ended September 30, 2025, was $680,000, an increase of $165,000, or 32.0%, compared to $515,000 for the same period in 2024[145] - Interest income on loans increased by $291,000, or 7.2%, to $4.3 million for the three months ended September 30, 2025, driven by a 6.2% increase in average loan balances[147] - Noninterest income increased by $597,000, or 112.6%, to $1.1 million for the three months ended September 30, 2025[159] - Noninterest expense increased by $274,000, or 9.5%, to $3.2 million for the three months ended September 30, 2025[160] - Net income for the nine months ended September 30, 2025 was $2.0 million, compared to a net loss of $1.8 million for the same period in 2024, an increase of $3.8 million, or 211.1%[167] - Interest income for the nine months ended September 30, 2025 was $16.7 million, a decrease of $129,000, or 0.8%, from $16.8 million for the same period in 2024[168] Interest Income and Expense - Interest income on loans increased by $1.5 million, or 12.6%, to $13.0 million for the nine months ended September 30, 2025[169] - Total interest expense decreased by $202,000, or 8.1%, to $2.3 million for the three months ended September 30, 2025[154] - Net interest income increased by $64,000, or 2.0%, to $3.3 million for the three months ended September 30, 2025[157] - Total interest expense decreased by $549,000, or 7.4%, to $6.9 million, driven by a decrease in average interest-bearing liabilities by $13.5 million, or 3.8%[176] - Net interest income increased by $420,000, or 4.5%, to $9.8 million, primarily due to an increase in net interest margin of 23 basis points, or 7.9%[179] Credit Quality and Losses - The allowance for credit losses is based on historical experience and various factors affecting collectability[123] - Provision for credit losses increased by $224,000, or 85.2%, to $487,000 for the three months ended September 30, 2025[158] - Provision for credit losses increased by $448,000, or 407.3%, to $558,000, primarily due to a $453,000 charge related to a foreclosed multi-family property[180] - The allowance for credit losses to loans and leases held for investment was 1.13% as of September 30, 2025, with $9.0 million in nonaccrual loans transferred to other real estate owned during Q3 2025[200] Asset Management and Liquidity - The bank maintains strong underwriting standards and asset management procedures, continuously monitoring credit quality in the loan portfolio[200] - The bank's liquidity sources include the Federal Reserve discount window and the ability to sell securities and loans in the secondary market as needed[203] - The bank's strategies to manage interest rate risk include maintaining capital levels above regulatory thresholds and diversifying the loan portfolio with more commercial loans[208] - The bank's overall asset quality remains strong, with ongoing monitoring of housing supply and demand for potential market changes[200] Market and Economic Factors - Accumulated other comprehensive loss decreased by $1.5 million, or 31.3%, to $3.3 million, net of tax, due primarily to changes in market interest rates[130] - The total gross unrealized losses on the securities portfolio amounted to $5.8 million, or 5.4% of the $109.1 million portfolio, primarily due to market interest rate increases[196] - As of September 30, 2025, the net unrealized loss on AFS securities was $3.3 million, representing 5.7% of capital, with expected cash flow from the securities portfolio totaling $46.8 million over the next 24 months[198] - A 200 basis point increase in interest rates would result in a 2.56% increase in net interest income, while a 200 basis point decrease would lead to a 1.26% decrease[209] - The estimated economic value of equity (EVE) as of September 30, 2025, was $61,558,000, with a 200 basis point increase in interest rates resulting in a 2.37% decrease in EVE[214] Borrowing and Advances - At September 30, 2025, the company had outstanding advances of $48.8 million from the Federal Home Loan Bank of Dallas and unused borrowing capacity of $102.5 million[189] - The bank's FHLB borrowing capacity stood at $102.5 million, with an additional $8 million in unused credit lines available from correspondent banks[203] - The bank entered into interest rate swap agreements totaling $25 million to hedge against changes in the fair value of fixed rate AFS securities, terminating these agreements at a gain of $463,000 in Q1 2025[199]